This section aims to provide a brief overview of certain available credit lines integrated into the mutual guarantee system. The content is based on the information available at the following address, where further developments can be found on the aspects mentioned below: https://www.spgm.pt/pt/catalogo/linha-de-apoio-a-economia-covid-19/.

The European Commission has approved the support of financing through mutual guarantees, benefiting from public counter-guarantee. With respect to the State aid, additional information can be found under "Impact on granting the State aid to the companies".

 

What credit lines are available?

The following credit lines are available under the COVID-19 Economic Support Line:

  • COVID-19: Support to Economic Activity;
  • COVID -19: Support to Catering and similar companies;
  • COVID -19: Support to Tourism enterprises;
  • COVID -19: Support to Travel Agencies, Touristic Animation, Event Organizers and similar.

In general, between 80% and 90% of the financing is guaranteed by the mutual guarantee system. Each line has its own conditions, and the interested party should consult such conditions (including maximum amounts per company, eligible/ineligible operations, deadlines, the relevant Portuguese Classification of Economic Activities (CAEs), etc.):

Among other costs and charges, the transaction will involve the payment of a guarantee commission, the value of which varies according to the time frame and amount guaranteed.

 

Who can access these lines of credit?

Micro, Small and Medium Enterprises, as well as Small Mid-Cap and Mid-Cap, in each case as defined / certified under the legally applicable terms, can benefit from these Lines. They must be located in the national territory and develop activity framed in the list of CAEs relevant to the intended Line and that comply with the other eligibility criteria established in the so-called Disclosure Document (whose link may be found at the above address).
The following criteria are applicable for each company:

  • positive net worth on the last approved balance sheet (a requirement that presents some exceptions / possibilities of remedy)
  • no unregulated incidents with the financial system, and to have the tax and social security situation regularised
  • not to be considered as companies in difficulty on 31 December 2019 (the current difficulties must result from the worsening of economic conditions following the COVID-19 epidemic)
  • submit a declaration in which the company (i) assumes the commitment to maintain permanent jobs until 31 December 2020, as compared to 1 February 2020, declaring not to have advance or will advance, during this period, processes of collective dismissal or dismissal for job extinction, or (ii) demonstrate to be subject to the lay-off regime, as approved by the Social Security

The forms to prove the above items are also available at the above address.

 

What process should I follow?

To access the desired Line, the company shall contact one of the registered banks and deal with its application forms and documentation. The bank's decision to approve or refuse shall be communicated within 5 working days from the date of application.
Once the bank has approved the operation, it will articulate the procedure with the mutual guarantee system, within short deadlines.
After approval for mutual guarantee, the financing operation shall be contracted with the company within 30 working days from the date of sending this approval to the bank.

 

Measures to Support Start-ups

The Portuguese Government presented seven measures to support national start-ups in the context of the Covid-19 pandemic, amounting to more than EUR 25 million.Here you may find additional information.

We would highlight the following:

  • Mezzanine Funding for Start-ups: A loan convertible into share capital (shareholder loans), after 12 months, with a discount rate to avoid the dilution of promoters. Average investment tickets of between EUR 50,000 and EUR 100,000 per start-up;
  • Launch of Covid-19 Portugal Ventures: Launch of Portugal Ventures Call for investments in start-ups, with tickets starting from EUR 50,000. Initiative financed through the Portuguese Development Financial Institution (IFD), Portugal Ventures and Imprensa Nacional – Casa da Moeda.

In the current pandemic context, start-ups can also apply for two sources of support already in place that have been adapted to provide more effective responses, namely, the EUR 200M Fund and the Co-Investment Fund for Social Innovation.

 

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This information is being updated on a regular basis.

All information contained herein and all opinions expressed are of a general nature and are not intended to substitute recourse to expert legal advice for the resolution of real cases.